August 2024
- The Realtor.com® economics team video update gives you the relevant economic and real estate information you need to know to navigate the housing market as a homebuyer, home seller, or industry professional.
- In August, Chief Economist Danielle Hale reviews the shifting economic data that are putting more focus on a weakening labor market and somewhat less on moderating inflation. She recaps the July Fed meeting, discusses clues from Chair Powell’s Jackson Hole address, and lays out her expectations for September.
- As is typical, mortgage rates have moved ahead of the Fed and the latest Realtor.com Housing & Economic forecast expects more to come. Danielle discusses how these changes are impacting mortgage rate lock-in and homebuyer sentiment. Danielle gives important rent vs. buy context from the July Rental Trends report authored by Jiayi Xu.
- Danielle recaps the latest reaction from Joel Berner on builders and new home construction, recent existing home sales, and shares highlights from the Realtor.com July Housing Trends report by Ralph McLaughlin which finds some balance returning to many markets.
- Nevertheless, some real estate markets are still hot. Danielle discusses the 2024 Realtor.com Hottest Zip Codes report by Hannah Jones and its number one ZIP.
- Danielle also discusses what this finding has in common with the Realtor.com list of Popular Markets. Hint: affordability matters.
- Find details and Realtor.com® housing data for download at realtor.com/research. And follow us on X (formerly twitter): @rdc_economics, for real time updates.
- Have an economic question you want the team to answer? Leave a note in the comments below!
VIDEO TRANSCRIPT:
- I’m Danielle Hale, Chief Economist at Realtor.com®. As vacation season wraps up and school buses and pumpkin spice reappear, here’s what you need to know!
- The Fed did not cut its policy rate in July, but weaker than expected July jobs data followed by moderating inflation and downward revisions to this year’s job figures all set the stage for a September rate reduction.
- In his August address to economists in Jackson Hole, Chair Powell gave the clearest indication yet that a Fed rate cuts are on the horizon but maintained that the timing and pace will depend on the data.
- With another job and inflation reading to go before the Fed’s September decision, the size of the rate cut could change, but the market currently expects just a quarter of a point. A half point reduction is possible, but not my base case.
- Even so, mortgage rates have dipped to the mid 6% range, helping to shore up buyer purchasing power that had eroded as rates surged. These rates aren’t low enough to erase the mortgage rate lock-in effect as 86% of borrowers still have a sub-6% rate, but they’re a start. And the updated Realtor.com housing forecast expects them to go lower.
- At the same time, falling mortgage rates haven’t yet boosted buyer sentiment, and consumers are split on the direction for mortgage rates in the year ahead. Only a minority of consumers said it was a good time to buy a home, perhaps reflecting Realtor.com economist Jiayi Xu’s finding that renting is more affordable than buying a starter home in all 50 markets reviewed in July.
- Aware of these trends, Joel Berner found that builders throttled back, with both single-family and multi-family starts and permits down, but sales of existing homes stabilized at a low level. Growing inventories, which reached a 5-year high according to Ralph McLaughlin and the Realtor.com July Housing Trends Report, are helping to usher in more balance in housing. Even though the number of homes for sale trails 2017-2019 levels by 30%, the slower pace of sales–even after a bit of a July bounce–means less frenzy than would otherwise be expected at these counts.
- Still real estate is local and the heat is on in some markets. The recent Realtor.com Hottest Zip Codes report by Hannah Jones reveals that affordable markets continue to attract outsized homebuyer & investor attention which helped push repeat ZIP 43230 in Gahanna, Ohio to the top of the list.
- Similarly, Jiayi Xu found that a mix of Southern and Midwestern markets topped the Realtor.com list of Popular Markets, areas that draw buyers in and–importantly–also hold on to existing residents.
- You’ll find all the details including full reports and our housing data for download at realtor.com/research. You can also follow us on X (formerly twitter) for real time updates.
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